A July 2024 report by the Mo Ibrahim Foundation suggests that Africa does not need more financial aid to meet its economic development and climate reform goals. Instead, the report suggests that Africa needs better management of its financial resources. Contrary to the prevailing narrative that external aid is crucial to Africa’s progress, the real challenge lies in the effective allocation, governance, and accountability of the continent’s revenue from other sources, especially export earnings.
The report emphasizes that Africa’s domestic resources, often dormant or misused, could significantly advance the continent’s development. Preventing illicit financial flows, for instance, could generate up to $100 billion annually, surpassing official development assistance and remittances. The potential for resource generation underscores the importance of robust governance to ensure that available assets are directed towards the citizens’ best interests.
By fostering a favorable business environment, governments can encourage large indigenous companies like Dangote Group and Econet to invest heavily in critical infrastructure and telecommunications, which could help propel local economies.
Several African countries provide inspiring examples of successful resource mobilization and governance. Rwanda, through its emphasis on strategic investments has made remarkable strides in infrastructure and social services. Public-private partnership (PPP) is also playing a vital role in Rwanda’s progress, offering a model for other nations. According to the World Bank, Rwanda’s ability to attract private investment through infrastructure partnerships, like the Kigali Bulk Water Supply Project, has been crucial in driving its socio-economic development.
This success story highlights the power of effective resource management. By reinvesting revenues from natural resources into sectors like education, healthcare, and infrastructure, the country has achieved significant upward economic mobility. While nations such as Rwanda have received foreign aid in recent years, their achievements are rooted in sound resource management rather than dependency on external assistance.
Private corporations, especially indigenously owned ones, have crucial roles to play in maximizing the impact of investments in Africa. By fostering a favorable business environment, governments can encourage large indigenous companies like Dangote Group and Econet to invest heavily in critical infrastructure and telecommunications, which could help propel local economies.
Promoting PPPs is another critical solution. PPPs can play a pivotal role in sectors such as energy, transportation, and technology, where the private sector’s innovation can complement the public sector’s infrastructure and reach. In Africa, public-private partnerships have driven significant progress. For example, the Renewable Energy Independent Power Producer Procurement Programme in South Africa attracted private investment to scale up renewable energy projects, complementing public infrastructure and energy policy.
Also, investing in capacity building is vital for sustainable development. Building the capacity of local institutions and human resources ensures that development projects are managed effectively. Training programs and knowledge-sharing initiatives are essential in empowering local actors, such as farmers, civil society groups, and local government agencies, to take charge of projects. Examples like Farmer Field Schools (FFS), originating in Southeast Asia, and the Green Belt Movement in Kenya, highlight the power of local training in sustainable practices. FFS empowers farmers with hands-on agricultural skills, while the Green Belt Movement mobilizes communities for environmental conservation. These initiatives prove that equipping locals with the proper knowledge is critical to long-term success. Without such skills, even the most well-funded projects risk failure.
Africa stands at a critical juncture. The path to sustainable development lies not in more external aid but in optimizing resources.
Kevin D. Mofokeng is a writing fellow at African Liberty.
Article was first published in Modern Ghana.
Photo by Alicia Razuri via Unsplash.